Was Smart Grid Funding Misspent?

A recent report from the National Institute for Science, Law & Public Policy came with a provocative press release title: “Smart Grid Funding Misspent on Obsolete Technologies.”

The press release got plenty of attention from the utility and smart grid news circles, but it’s tough to tell if any of those actually read the report, “Getting Smarter About the Smart Grid,” written by Timothy Schoechle, a consultant in computer engineering and standardization and former faculty member of the University of Colorado's College of Engineering and Applied Science.

The report primarily takes aim at smart meters, which got the lion share of stimulus funding. Schoechle raises many questions and concerns that many others in the industry have identified, including the value of smart meters (although he also does not acknowledge their value when connected to more end-to-end smart grid projects, as many others do); the question of data privacy; and the issue of whether the meters, in and of themselves, will save consumers money.

Schoechle, it could be argued, is thinking big -- maybe too big. Some of his criticisms of the White House’s Smart Grid Policy Framework may be fair, but many of the deeper issues, such as internalizing the cost of carbon-based fuels, are unlikely to be taken up by anyone in office. After all, the government can’t even get comprehensive federal energy efficiency policy in place, and it’s hard to hate efficiency.

Greentech Media recently spoke with Schoechle about the report, and where he thinks the bright spots may be on the path to a new electricity economy.

Greentech Media: Everyone has a different definition of smart grid. One of your criticisms is that smart meters became synonymous with smart grid. How do you define the term?

Timothy Schoechle: At first, we were all excited about smart grid. Originally, the most basic definition is using IT to improve the reliability of the grid. But in the last few years, that morphed into more than just reliability, and included balancing supply and demand, and enabling renewables. I think that’s broadened it a little bit.

GTM: In terms of federal dollars, where would you have liked to see money go to instead of smart meters?

TS: The money that went to distribution automation and distribution reliability was a good idea. I think the main research and development -- in the Pacific Northwest and at NREL -- those I’m very complimentary about. Even Berkeley Lab’s project with electric vehicles and Argonne National Lab -- I think that’s money well spent and should have been expanded.

What irritated me was that the meters were touted as bringing other benefits, but they did not. I think the money should have gone into development of renewables and the national labs. The thing that bothers me right now is that the Department of Commerce initiated NIST involvement with setting standards. To get the real smart grid, you need to get standards. But what has happened is that Smart Grid Interoperability Panel has about 30 panels under NIST that they funded, but now they’ve pulled all the funding and are privatizing the entire committee. Now they’re expecting those who want to participate to pay up. The basic thing government should do is sponsor standardization.

GTM: In your report, there seems to be plenty of blame to go around, between utilities, regulators and the government. Where do you place the blame for what you see as a lack of willingness to truly tackle moving the electricity industry forward?

TS: I’d say the lack of federal leadership. They had the access to the expertise and they could have set the priorities and could have given the guidance that could have been given to the industry. While the federal labs have done a great job, the leaders have dropped the ball. The other place is the feeding frenzy by the vendor community to the utilities. The people who really pushed it and continue to push it are the third-party vendors. They are the ones who have misrepresented the data.

GTM: You state in the report that “standby power plants need to be engaged, along with renewable energy sources and smart grid technology, to completely eliminate baseload generation.” Can you explain what you mean by that?

TS: One of the most difficult concepts in this whole field is baseload generation. The idea of a baseload system based on coal or nuclear, it’s running at a maximum efficiency. When you use renewables, they’re variable. When you put that on top of a baseload, it’s a solution where you can’t use it all the time.

In Germany, they said they’d curtail the baseload. The baseload generators didn’t like that. So they were in a jam. But they figured out how to do it pretty well. In this country, the utilities make their money off of baseload. But what you have to do, you have to get rid of baseload and rely on renewables and peaker plants with some storage, whether pumped hydro or batteries.

The problem is the huge subsidies to carbon energy are not going to go away. And of course, nuclear couldn’t exist for a minute without heavy subsidies. The future is in community systems. With the decline in stimulus efforts, utilities are losing interest in the smart grid. That’s why I think the smart grid controversy is a good place to start; it draws attention to the issue. It’s like we have to give up on the feds and regulators and take this matter up on a local basis and build community systems. I think if Boulder is successful in doing this [starting its own municipal utility], it will be a model for the whole country.

GTM: Is there any utility in the U.S. -- investor-owned or co-op/muni -- that you think is making good progress on becoming the utility of the future?

GTM: You have a variety of regulatory policies you’d like to see changed, if you had to pick one or two in the short term, which do you think are the most important to effect change in the utility industry?

TS: To lighten up on municipalization. […] The PUCs and legislatures need to enable communities to develop community-based systems.

The reason for municipalization in Boulder is not the price of electricity; it’s the access to renewable energy. The citizens are very into renewables and the utility’s basic incentive doesn’t work that way.

TS: What they were trying to do was figure out what to do with this data. Some people said, “At least if we standardize the format, then entrepreneurs will come up with devices and apps that can use it.” They said, “We don’t really know how to use it. But someone will figure it out.” It’s kind of a leap of faith. I think it’s a useless effort. It’s well-intentioned, but it’s not the answer.

GTM: Is there an area of smart grid and clean energy where you’re hopeful?

TS: I’ve heard of a number of projects of combining wind farms and peakers to create a pseudo-baseline system. I’m not a big fan of big transmission, and we should use electricity as close to where it’s generated as possible. But combining wind, hydro and sun in a peaker plant could create a new utility.